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Reengineering Healthcare: Healthcare Information Technology Trends Get Traction

Originally published June 4, 2009

Information technology (IT) is positioned to make a critical difference in the success of healthcare reform and reengineering. The healthcare systems in the U.S. are poised to undergo the most significant changes they have faced since the introduction of Medicare in 1965 when computing was just beginning to emerge. Fast forward all these years and the thought leaders at The Data Warehousing Institute such as Philip Russom, Jill Dyché, Claudia Imhoff, Cindi Howson, and others whose sessions at the May 2009 TDWI World Conference I could not attend, are in agreement. Examples of breakthrough applications in healthcare analytics are becoming more common, getting more attention and attracting more resources. Healthcare analytics will be an essential part of healthcare reform whether it is baked in from the start or bolted on as an afterthought.

In case you have been living in a cave, a near supermajority of Democrats in Congress and parliamentary mechanisms such as budgetary reconciliation are enabling legislative action with a mere majority of votes in Congress. This means that the Obama Administration has decided that “it could have been worse” is not a good platform to run on four years from now, and the President has decided to get things done. At the top of the list is healthcare.

The implications for IT go far beyond the $19 billion for health information technology adoption and implementation of electronic health records (EHRs). This is both a carrot and stick approach. Payment “bonuses” of between $44,000 and $64,000 are scheduled for physicians and some $11 million for hospitals that implement EHRs, whereas those that do not implement EHRs by 2014 face the loss of Medicare reimbursements, a draconian penalty.

While payers such as insurance companies and providers such as hospitals and doctors are sometimes like dogs and cats – or, depending on your metaphor, from Mars or Venus – the challenges facing the system in the face of legislative reform (and mandates) are shared by all participants and players. The risks are significant. The politics are likely to be brutal and open-ended. But the stakes are too high to do nothing. Right now rationing of healthcare and physician choice are affected in the middle class by job loss, the high cost of care relative to wages, individual judgment, Medicaid, despair and even more serious maladies as small problems become large ones due to not being treated, which drives people into bankruptcy.

IT healthcare trends include the following:

  • The EHR currently has the buzz. Expect everyone to have an EHR and make it the focus of the conversation over the short term. The idea is a compelling one. Hand-written notes by physicians often go into the hospital or office archives, never to come out again. Even when the clinical case notes are retrieved, the amount of time spent searching for information by nurses, technicians and support staff is excessive and undocumented. It makes good, solid sense not to just pave the cow path – to lay down automation on top of the winding and inefficient legacy process – but to reengineer the process itself to make use of automated capture, retention and retrieval of patient information. The dirty little secret about EHR? Standardization is still emerging. The existing systems are mostly inconsistent with one another; and, amazingly enough, even when they implement the same standards (HL7), differences of detail and the interpretation of versions and releases continue to present “gotchas,” which are appreciated by IT professionals but remain frustratingly incomprehensible to well-educated physicians, biologists and healthcare administrators. Still, the EHR is happening and will become a lightning rod for leveraging changes throughout the system.

  • Open source software has a tremendous opportunity and challenge. In the healthcare market, as in any market, cost savings is a priority as a rebuild and build-out of IT infrastructure occurs to support the capture of additional quality and performance metrics, an expanded list of emerging medical procedures, value-added purchasing and related data. Open source software is now available at all layers of the system architecture – the back end with databases such as mySQL and Postgres, middleware with Apache and ETL tools such as Talend, and at the front end with Jaspersoft and Pentaho. None of these providers specialize in healthcare as such, though Talend has a couple of high profile success stories.1 One significant inflection point for which to watch is whether or not the regulatory authorities offer additional incentives for the use of technologies with open source software licenses. The short recommendation is to always ask for a software development road map with definite and meaningful open source commitments and dates on it.

  • An opportunity for a Quicken-class medical practice management solution emerges. There is a substantial opportunity for the equivalent of a Quicken-class medical practice management software system that combines modules for scheduling, billing and third-party interfaces on the business side with clinical charts, electronic medical record and patient history on the clinical side – and at an affordable price and scale that a small medical practice can afford and operate. It is hard to believe that the reams of paper in which most doctors are drowning cannot be improved upon by means of automation. I am at a loss why doctors are still taking handwritten notes instead of entering them into a notebook class computer that is wirelessly connected to the server running the office network (and taking automated, frequent backups). Companies such as Microsoft, IBM, HP, SAP and Oracle are waiting in the wings if EPIC, Cerner, GE/IDX and Siemens/SMS cannot deliver suitable systems. In fact, this points to the first coming confrontation. The former have the software development expertise, the latter the domain knowledge experience. Both are required.

  • Healthcare ERP (“enterprise resource planning”) will get traction from a looming Y2K-like event. The mandate to update ICD-9 (International Classification of Diseases) to ICD-10 will drive system replacements in many markets. It will simply be easier to replace the legacy system than to reverse engineer it to fix the different, incompatible formats between ICD-9 and ICD-10. There is a Y2K-like event looming in healthcare. Not to over-dramatize, the disruption and effort will be significant. The “big bang” in healthcare is scheduled for October 1, 2013, by which time the switch from the increasing obsolete ICD-9 (International Classification of Diseases) to ICD-10 is required by the regulatory authorities. Even if ICD-9 were not running out of procedure codes, it is still inadequate to capture the distinctions needed for quality reporting, value-added purchasing and even the EHR. For example, 4 separate ICD-9 codes are needed to adequately categorize a spinal fusion with sufficient detail to describe the level of surgery and devices used. In contrast, a single 7-character ICD-10 code is sufficient to differentiate body parts, surgical approaches and devices used. However, the different formats indicate this will be a Y2K-class event in that it affects every provider and payer system that uses diagnostics, albeit one that can be phased in more gradually than a single night. Even if your software does not contain “hard coded” ICD-9 values, the differences in format will affect every application, database and interface that handles diagnosis and procedure codes, extending from data capture, to adjudication, through reporting and analysis. For those systems that were designed according to object-oriented principles with ICD access in large working storage areas larger than the new codes, the impact will be relatively contained, though testing through the system will still be a diligent best practice. However, for those applications where the format of ICD-9 is represented in the application, the impact will be significant.

  • Healthcare computing cloud is on the horizon. Healthcare payers – especially the Blue Cross insurance firms – were among the first to employ electronic data interchange (EDI) through proprietary wide area communication networks in the 1980s. Fast forward nearly thirty years and a dozen information technology revolutions later, the idea is still a powerful method of attaining efficiencies in workflow and transaction processing. Enter now the high concept of a healthcare computing cloud.2 With the proper security protocols, largely in the form of encrypted data transfer, the development of a set of protocols for the communication of patient medical information between authorized providers and providers and payers will enable workflow process and efficiencies. Instead of handing the patient a large manila envelope and having him or her walk it over to the office of the physician with whom the next consultation is scheduled, the x-ray or MRI technician will press a button and transmit the information from one system to another. Of course, the existing Internet is likely to provide the basic structure on top of which additional virtualization, virtual private network function and special purpose medical practice application programming interface (API) will ride. For the time being, this is just a concept. But it makes sense for the regulatory authorities to prime the pump in terms of standards setting, research grants and demonstration projects.

Predictions and Recommendations

Healthcare analytics will be an essential part of healthcare reform whether it is baked in from the start or bolted on as an afterthought.

The EHR is an enabler of diverse downstream applications emphasizing quality, performance metrics and the efficiencies of system integration. The “gotcha” is that the diverse legacy EHRs do not necessarily interoperate. Automated systems are designed to provide translation between different versions and releases of EHRs; but the usual amount of hard work should be anticipated, planned for and executed.

Exploit the cost advantages of open source wherever such implementations are feasible and practical. Always plan on budgeting and paying for professional level software support with a 24x7 service level agreement (for those institutions that operate 24x7). Demand a road map from proprietary vendors that includes the cost savings of open source software as a commitment with dates and delivery timeframe.

Even though the big event of ICD-9 to ICD-10 transition is not scheduled until October 2013, start the education and planning process now. The looming changes due to healthcare reform and IT enablement will combine with this event to drive the development and deployment of a whole new class of medical ERP practice management. IT vendors such as IBM, Microsoft, Oracle, SAP and more are keenly aware of the revenue opportunities in healthcare and are marshalling their forces at all levels. Healthcare consulting practices have been in place for years; but the market for software offerings had been dominated by Cerner, Epic, GE and Siemens/SMS. Expect the latter to be challenged by the former on their own turf even more so in the coming period.

End Notes:
  1. See UMIT and Children's Hospital case studies.

  2. See “Data Warehousing in the Clouds: Making Sense of the Cloud Computing Market,” October, 9 2008.

  • Lou AgostaLou Agosta
    Lou Agosta is an independent industry analyst, specializing in data warehousing, data mining and data quality. A former industry analyst at Giga Information Group, Agosta has published extensively on industry trends in data warehousing, business and information technology. He is currently focusing on the challenge of transforming America’s healthcare system using information technology (HIT). He can be reached at LAgosta@acm.org.

    Editor's Note: More articles, resources, and events are available in Lou's BeyeNETWORK Expert Channel. Be sure to visit today!

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Posted June 10, 2009 by Peter Vescuso pvescuso@blackducksoftware.com

Lou is right pointing out the potential of open source software to help with cost savings, although he didn't refer to the many projects created specifically for healthcare. Black Duck just published results of an investigation we did into open source projects in healthcare. We found over 800 open source projects that would cost over $6 billion if developed from scratch for the healthcare and medical fields, many related to EHR. It's at:


Lou, there's more freely available software specifically for healthcare than many realize. Putting more emphasis on this $6 billion resource, plus the power of the 800 communities of develoeprs behind these projects, should help accelerate the reengineering of healthcare.


Peter Vescuso

Black Duck Software


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Posted June 5, 2009 by Anonymous

Some interesting Healthcare related Customers Success Stories using Pentaho can also be found here:

Cardiac Science

National Health Service Islington

Loma Linda University Health Care

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Posted June 5, 2009 by George Allen

This is a very timely and insightful article.  Though the push for EHR/PHR is long overdue, some caution needs to be applied. The EHR solutions I have seen are mere replications of the prior paper charts and notes and are unsuited for the in-depth analytical needs that will improve healthcare in the short and long term.  Practive management needs to be the underpinnning of the EHR solutionso that the individual patient receives benefit, and the practice can also identify quality improvement, cost savings, and pandemic identification opportiunites.

This comment is my own, and not a reflection of the opinions or policies of the Department of Veterans Affairs.


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Posted June 4, 2009 by Jill Dyche

Lou Agosta has just done a masterful job of distilling the current issues health care providers face as they emerge into the glaring light of healthcare reform. The impact of electronic medical records and clinical system upgrades and replacements on BI--and vice versa--can't be overstated. The impact on patients remains to be seen.

5 stars, Lou!

Jill Dyche

Baseline Consulting

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